Could Tesla 'Gigafactory' Bring EVs to the Masses?

Tesla Motors plans to build a huge battery factory in hopes of making electric cars affordable for the masses. Known as the “Gigafactory,” it would be the world’s biggest facility of its kind, and would enable Tesla to control manufacturing from the raw materials on up to the finished battery pack. Tesla executives see the factory as an integral part of the company’s plan to build a “compelling, affordable electric car” by 2016.

Industry analysts say the plan hinges on a paradigm shift -- widespread adoption of electric vehicles in virtually every corner of the automotive market. “It’s really reliant on the idea that Tesla can go after the mass market, which is not proven by any means,” Kevin See, senior analyst for Lux Research, told Design News.

Tesla has not yet officially announced plans for the factory, but in a shareholders’
statement it indicated that it plans to integrate cells, modules, and packs at the facility. It would be a departure for the upstart automaker, which currently buys cylindrical 18650-sized cells from suppliers, places them in modules, and then assembles the modules into huge packs containing about 7,000 cells.

By employing vertical integration, rather than relying on outside suppliers, Tesla executives believe they can extract costs from the battery manufacturing process. “It’s about controlling the value chain,” See told us. “They want to be able to control the process all along the supply chain and ultimately improve their costs.”

The plan is consistent with what Tesla CEO Elon Musk declared in June 2013. At an annual shareholders meeting, he said he aimed to roll out a smaller version of the well known Model S for about half the price by 2016. If it indeed costs half as much, it would carry a price tag of $30,000 to $40,000.

Today, Tesla sales represent about one-tenth of one percent of the US market.

If the plant does reach fruition, it would put Tesla in a potential position of competing against other lithium-ion battery suppliers, many of which are not running at full capacity. Panasonic Corp., which now serves as a supplier to Tesla, is reported to be considering an investment of $979 billion in the new plant.

Analysts said the costs of such a plant would be astronomical, and would likely put Tesla in the position of having to sell batteries to other markets, such as the stationary power market, to pay for the factory. “You’d have huge overhead costs associated with it,” David Hurst, analyst for Navigant Research, told us. “You’d have machines, land, taxes, security, electrical, and maybe employees, too. And you’d have to pay for those things, whether or not you’re running the [manufacturing] lines.”

A Tesla representative told Design News that the company is not yet ready to release details on the Gigafactory. Timing of an official announcement has not been determined, the rep said in an email.

Analysts believe that much still needs to be done before Tesla can take on such a project. “As much momentum as the company now has, it’s still catering to an early adopter audience,” See told us. “If you’re going to talk about building the biggest battery factory in the world, you first need to have a product that appeals to the mass market.”

Good points, bbix. It's interesting that of all the press this announcement has received, virtually no one has raised the question of whether you can build a $5 billion "gigafactory" in under two years, which I think is the stated goal.

I'm not sure about all the plants but the one Dow built in Midland is still operating under new ownership. I think they don't have much demand and are running maybe one shift. Plants take a long time to build and several companies all thought that if they could get theirs built first, and as the demand developed, they would capture it. They also all have somewhat different technology and of course each company thinks theirs is the best. Given the rapid rate of technical development in this field though, it is very easy for your state of the art tech to be superseded by something better / cheaper, before you can get yours online and capturing market share.

There are a good number of reasons why the Tesla model for a Lithium Ion battery pack is as it is. I'd have just provided a link to the info, but I cannot seem to find the source I originally read. Tesla's battery design seems to be VERY well thought out, and arguably better than any other for the purpose of EV's, regardless size or type (cylindrical/prismatic) of cell. Telsa uses multiple, paralleled, series-strings of batteries and is DESIGNED for the eventuality of cell failure. So that the vehicle will continue to operate, with only somewhat reduced capacity because failed string(s) are designed to be isolated from the rest of the pack. These small cells are the most ubiquitous form of this chemistry in the industry, and there is a LOT of experience around their manufacture. They ARE small, for other reasons too... if a cell should fail, it's far more likely that it's thermal effects are going to be inherently quenched by the liquid cooling system, before any adjacent cells are overheated. And as absolutely stunning as the Model S is, it's in this battery pack that true beauty lies. Boeing could have learned a thing or two from Elon Musk & company - when you've got volatile chemistry involved, you have to design for failure. Boeing did not do that at all, initially, and their "solution" now is to keep the rest of the aircraft from making an ash of itself... admirable goal, but if the entire battery is so easily dispensed with, why bother putting it in the plane in the first place? BTW - battery pack swaps are possible to be made VERY fast, because it's designed that way. The model for swaps is that you would pay a charge for the use of a fully charged "loaner" battery, and your own pack (by then, fully charged) is put back into your vehicle when making your return trip. "Supercharger" stations are being added as I write this, but they already span both US coasts and stretch entirely across East-West - their use is FREE for Tesla owners (including the KWhrs)... battery swaps are for those folks with far less patience than money, perhaps, like Elon himself.

Automakers that don't meet the California ZEV mandate must still buy ZEV credits from automakers who deliver EVs. That system remains in place. But you are absolutely right, CharlesM, that Tesla earned $0 in ZEV credits in the fourth quarter of 2013, yet earned $46 million in net income.

- incentives for oil companies (exploration, tranport, refineries, etc.) impacting any comparisons with EVs. Why is the cost of gas in Venezuela only 4 cents /gallon and in Turkey it is $9.55/gallon? It isn't a technical reason.

And those that think they have researched ALL the data to reach any conclusion....are only fooling themselves.. it will be obsolete within days of it's completion. Because the "facts" are in a constant state of flux. (new mining of lithium in Cal , a war in Africa impacting available current lithium prices, new technology that the public isn't aware of... .and all impacting the comparisons between internal combusion engines and electric motors).

If Elon can make sense of creating EVs with the rules and markets of the day.. more power to him. I find no moral issue with it.

I wish I could say that the "big three" never did anything morally questionable. (GM's killing of LA's public transit system in the fiftys? the most recent bailout?)

You won't have to look very far to find nearly anything humans doing - without some questionable moral aspect.

@ChriSharek You said "the Order of the Engineer Ceremony, I pledged to "serve humanity my making the best use of the Earth's precious wealth."

This is the reason I shake my head in wonder as presumably competant engineers jump on this lunatic bandwagon of windmills, solar cells, and EVs at any cost.

Ethics (so rare in this world) prevent me from EVER endorsing this technology on a mass scale. It is utter lunacy from so many perspectives.

Companies like tesla are technical ponzie schemes that WILL collapse the same day the massive injections of other peoples (government) money stops. This makes it unethical.

As a practising (technical, not managagement) Engineer of over 35 years I am well aquainted with marketting hype, ponzi schemes, and government waste at all levels. I understand the long term consequences of ignoring lifecycle cost.

"Our obligation as an engineer should be to lead the public as well once technologies have been proven."

And what does "proven" mean to you? To me it means that people will want to buy "WITHOUT" using other peoples money.

Good point, William. Margaret Thatcher once said that "The trouble with Socialism is that eventually you run out of other people's money." I think that holds true in other endeavors as well...make it personal with your own money and you are going to think a lot harder about how you spend it.

Some cars are more reliable than others, but even the vehicles at the bottom of this year’s Consumer Reports reliability survey are vastly better than those of 20 years ago in the key areas of powertrain and hardware, experts said this week.

As it does every year, Consumers Union recently surveyed its members on the reliability of their vehicles. This year, it collected data on approximately 1.1 million cars and trucks, categorizing the members’ likes and dislikes, not only of their vehicles, but of the vehicle sub-systems, as well.

A few weeks ago, Ford Motor Co. quietly announced that it was rolling out a new wrinkle to the powerful safety feature called stability control, adding even more lifesaving potential to a technology that has already been very successful.

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